Payne v. Ss Tropic BreezePayne v. Ss Tropic Breeze
Gustavo A. Gelpi, San Juan, P.R., with whom Harvey B. Nachman and Nachman, Feldstein, Laffitte & Smith, San Juan, P.R., were on brief, for Apostolos Samadjopoulos, appellee.
Before ALDRICH, Chief Judge, McENTEE and COFFIN, Circuit Judges.
McENTEE, Circuit Judge.
The SS TROPIC BREEZE, a vessel of Liberian registry, was libeled in rem in Puerto Rico by members of its crew asserting claims for wages. The Master, the present appellee, was permitted to intervene by the district court1 in order to assert various claims against the vessel.2 The owners of the vessel did not appear and the court ordered the sale of the ship. At that point, National Western Life Insurance Company (hereinafter National), an intervenor and assignee of a mortgage on the vessel, entered into a stipulation with the other claimants postponing the sale, agreeing to satisfy all claims which the court found had priority over its mortgage, and undertaking to pay into court funds sufficient to cover the Marshal‘s expenses and the crew‘s wage and penalty claims. The district court held that all of the Master‘s claims were superior to the mortgage and entered judgment against National for $10,944.85, plus interest.3 National appeals.
Before dealing with the merits, we must dispose of the Master‘s contention that National waived its right to appeal when it entered into the stipulation postponing the sale. The language of the stipulation relied upon as constituting the waiver is as follows:
“Intervenor National Western Life Insurance Company heerby agrees to deposit into the Registry of the Court the aggregate amount of all such other claims that the Court may find as having priority over the claim filed, as mortgagee, by said Intervenor, such deposit to be made within five (5) days after the Court‘s determination.”
The Master contends that the undertaking to deposit the aggregate of prior claims within five days of the court‘s determination, without any mention of a delay pending appeal, indicates an intention that no appeal be taken. He draws support for this reading from a subsequent paragraph of the stipulation which explicitly noted that one of the intervenors, not a party to this appeal, signed without prejudice to an appeal from the order of sale, pending at the time of the agreement.
Assuming that an agreement to waive an appeal is enforceable,4 we cannot agree that this stipulation constitutes such an agreement. To begin with, the language relied upon does not speak directly to the subject of appeals. It merely provides that the money be paid into court. No provision calling for the immediate distribution of the funds to the claimants is included. Therefore, there is nothing in the quoted paragraph, standing alone, to support the Master‘s reading. The presence of the paragraph reserving rights under a pending appeal by another intervenor does not alter our conclusion. The appeal referred to in that instance was pending at the time the stipulation was agreed to. There is no reason to infer that appeals on other issues, as to which there had been no rulings at the time, were intended to be waived. The intention to waive the right to appeal must appear clearly from the stipulation.5 That condition is not satisfied here.
This brings us to the merits. We pause, however, to deal with the issue of the law governing priorities among maritime liens and mortgages.
In casting their argument on this point in traditional choice-of-law terms, the parties seem to have misapprehended the nature of the question. The Ship Mortgage Act6 establishes the relative priorities of foreign ship mortgages and other maritime liens. It is axiomatic that Congress has the power “to condition access to our ports by foreign-owned vessels upon submission” to our law, substantive and procedural. Lauritzen v. Larsen, 345 U.S. 571, 592, 73 S.Ct. 921, 933, 97 L.Ed. 1254 (1953). The crux of the matter, then, is whether Congress so intended the priority provisions of the Ship Mortgage Act. We conclude that it did.
Two factors are determinative of this result. The Act and its history leaves little room for doubt that Congress intended to have the Act apply to all foreclosures of foreign ship mortgages in American courts.7 Moreover, such a reading of the statute is entirely consistent with general principles of maritime law--an important consideration under Lauritzen--because priorities among maritime liens have traditionally been regarded as governed by the law of the forum.8 We therefore see no obstacle to the application of the Act in this case.
Post-Arrest Expenses
Following the arrest of the vessel, the Master gave the crew $300 from his own funds to buy food, spent an additional $364.20 for airplane fare to enable a number of his crew members to fly to Baltimore, Maryland, to take up other employment, and travelled to New York, with the court‘s approval, to seek funds from the owners, at a cost of $150. The district court held that the Master‘s claims for reimbursement for the cost of food and crew member transportation had priority over all other claims, as expenses while the ship was in custodia legis, and allowed the travel expense claim as well. Those rulings were plainly correct.
Expenditures while a ship is in custodia legis do not give rise to maritime liens. However, the Supreme Court has held that a district court, sitting in admiralty, has the equitable power to give priority to claims arising from the administration of property within the court‘s jurisdiction.10 This rule is plainly consistent with
Travel Expenses
The Master also claims $150 for the expense incurred by him in travelling to New York in his first attempt to secure funds from the owner, which took place prior to the seizure of the vessel. In order to prevail on this item, all that need be shown is that the travel expenses were “other necessaries” under
“It is usually for the advantage of all parties having an interest in a ship, whether such interest be in the nature of ownership or security, that she should be actively engaged in commerce and not left to rot in port. But to continue in active employment she must have supplies and services. To obtain them she must have credit. Admiralty law in most countries secures this for her by implying a maritime lien in favor of those who furnish such necessaries * * *.” Note, What Law Governs Maritime Liens, supra n. 8, at 356-57; accord, The J. E. Rumbell, 148 U.S. 1, 13 S.Ct. 498, 37 L.Ed. 345 (1893). The St. Jago de Cuba, 22 U.S. (9 Wheat.) 409, 6 L.Ed. 122 (1824)
In 1910, Congress passed the Federal Maritime Lien Act,
We think that a broad interpretation is more consistent with the purpose of the Act than the earlier, narrow approach. The principal concern is to keep the ship active, thereby facilitating the flow of commerce and protecting the interests of the owners and secured parties. The determination of what items constitute “other necessaries” must be made in light of this consideration. The appropriate test, therefore, is whether the goods or services in question were necessary to the continued operation of the vessel.
Measured by this standard, the Master‘s trip to secure funds, in the circumstances of this case, must be deemed a necessary. The TROPIC BREEZE was under an imminent threat of being arrested on the libel of its crew. An arrest promised to, and in fact did, terminate the voyage and jeopardize both the owner‘s and mortgagee‘s interests. Action reasonably essential to an effort to forestall such an occurrence, whether successful or not, is in furtherance of the underlying policy of the lien and the expenses incident thereto give rise to a maritime lien for necessaries.
We are supported in this view by Congress’ apparent intention that the statute be read expansively. The language of
We conclude that the district court was correct in allowing a lien for these travelling expenses and in according it priority over the mortgage.
The balance of the Master‘s claims may be dealt with together, as the priority of each is dependent upon whether it is a preferred maritime lien under
The term “crew” does not have a fixed meaning in the law. Rather, the scope of the phrase must be determined in light of general principles of maritime law and the policies sought to be promoted by the statute under consideration.
It will be observed that wage liens of the crew are accorded a highly favored position under the Act. They receive priority over preferred ship mortgages in spite of the overriding statutory purpose of protecting the security of holders of such mortgages.
This is entirely consistent with the status of seamen‘s wage claims under the general maritime law as applied by United States courts. The services of seamen are absolutely essential to the navigation of the vessel19 and they have been in a particularly helpless position down through history. They have been treated, therefore, as wards of admiralty and their wages given priority over all other claims.20 Never has this been more forcefully put than by Justice Gray, who stated that seamen‘s wages “are sacred liens, and, as long as a plank of the ship remains, the sailor is entitled, against all other persons, to the proceeds as security for his wages.”21
Juxtaposed to the treatment of ordinary seamen is that of the master. As early as 1828 it was regarded as settled that the master had no lien against the vessel for his wages.22 Our attention has been called to no contrary holding in the intervening years. It was not until 1968 that Congress, after recognizing the ancient rule,23 enacted legislation giving masters of American vessels liens for wages of the same rank and priority as seamen‘s wage liens.24
It might be argued that although inclusion of masters would have been of no significance in the application of the Act to masters of American vessels, this was not necessarily so in the case of foreign vessels. American courts regarded the question whether a wage lien arose as controlled by the law of the flag (or, in some cases, the lex loci contractus) and recognized such liens when created by foreign law.25 Hence, it could be argued that the statute should be construed to allow such foreign liens priority.
We think the Act cannot bear such a construction. The Ship Mortgage Act, until amended in 1954, applied only to American vessels. At the time the Act was passed, the only wage liens that might be enforced in an admiralty ship mortgage foreclosure proceeding were those of ordinary seamen.26 Hence, for the rule contended for to prevail, we would have to conclude that the Foreign Ship Mortgage Act intended to confer rights upon masters of some foreign vessels which had not yet been extended to masters of American vessels and which were not in harmony with American maritime law. Such an intention should appear clearly, but there is nothing in the statute or the legislative history which even remotely suggests such a purpose.27
Aside from the absence of any indication of such legislative intent, the treatment of masters’ wage liens must be viewed in historical context. While American courts recognized such liens when created by foreign law, their priority was controlled by the law of the forum28 and they were not given the same high priority as those of ordinary seamen.29 Thus, it would not have been inconsistent for Congress, presumptively aware of the status of foreign masters’ liens on the courts, to exclude them from a high priority class.
In light of the foregoing considerations, we conclude that the term “crew,” as used in
The judgment of the district court is affirmed insofar as it allows the Master‘s claims for custodia legis and travelling expenses. It is reversed insofar as it allows the Master‘s claims for wages, statutory double wages, and disbursements, and the case is remanded to the district court for the entry of judgment in accordance with this opinion.